Fujitsu buys up Amdahl

Fujitsu Ltd. will acquire the rest of the shares of Amdahl Corp. that it doesn't already own, in a deal worth about $850 million.

Fujitsu, which owns 42 per cent of Amdahl, will offer $12 per share for the remaining 58 per cent of the Sunnyvale, Calif., company, beginning August 5.

Amdahl will retain its name and its management team, and will operate as a wholly owned subsidiary of Fujitsu, according to a statement released by the company.

"With the resources available to it as a part of the Fujitsu Group, Amdahl will be able to further enhance the development and marketing of its hardware and software and services for the global market," Fujitsu president Tadashi Sekizawa said in the release. "We also see this transaction as an opportunity for Fujitsu to significantly extend its solutions-oriented business in the United States and Europe."

In the last few years, Amdahl has moved away from its traditional server and mainframe base toward providing software and services on a global basis. It acquired two services companies, DMR Group Inc. and Trecom Business Systems Inc., which now make up about 60 per cent of the company's revenues.

But while Amdahl was modifying its business focus, it was also losing money, a total of $337.6 million since last March, although sales rose about 24 per cent during the same time period.

In the release, Amdahl's CEO pointed to "significant changes" in the computer industry, with shorter product cycles and declining prices.

"In short, both our capital requirements and the need to expand our marketing reach are growing and this merger will give us the financial staying power, the access to superior technologies and the greater global presence we need to effectively compete in today's marketplace," CEO John Lewis said.

Amdahl's board of directors has already approved the deal.